LBJ

by Phillip F. Nelson

  Johnson’s most important fund-raisers during this time were Tommy Corcoran, George and Herman Brown, John Connally—who gathered cash from Sid Richardson and H. L. Hunt—and Ed Clark, who funneled money from Clint Murchison, among others.6 Johnson received payoffs not only from men like Murchison, but also from Teamster leader Jimmy Hoffa, another enemy of Robert Kennedy.7 For years, men came into Johnson’s office and handed him envelopes stuffed with cash. John Connally and Ed Clark spoke freely to Robert Caro about taking envelopes stuffed with cash to Washington inside the breast pockets of their suit jackets; they stated that the amounts were much larger than about which Claude Wild Jr. testified.8 As noted in chapter 1, Wild had testified that “the commitment was that Gulf Oil would furnish $50,000 (annually) to Senator Johnson for his use.” Yet Wild did not go to work for Gulf until 1959, and the payments started years before then. Connally stated, “I handled inordinate amounts of cash,” and Clark said, about the Gulf Oil payments, “I knew about that fifty thousand. I knew about two hundred thousand.”9 That was only one company, and Ed Clark was the cash courier for many other companies, including Brown & Root and the Humble Oil Company; he handled money transfers from many of the individual oilmen as well, even, on occasion, George R. Brown.10 Clark said all contributions were made in cash and given to Lyndon to disburse however he pleased, to himself, to his own campaigns, or to those of other favored senators. Ed Clark, Jesse Kellam, John Connally, and Tommy “the Cork” Corcoran all admitted to being involved in collecting cash campaign contributions in Johnson’s behalf. If Johnson decided that help needed to be extended to a particular senator, he would pass the word through his network, and shortly thereafter, the cash would be delivered to him. “All we knew was that Lyndon asked for it, and we gave it,’ Tommy (“The Cork”) Corcoran was to say.”11

  Johnson’s involvement with the infamous Billie Sol Estes resulted from his need to have someone in Washington pave the way for his complex frauds against the federal government. Of course, he needed someone very highly placed in order to accomplish his deceit—someone who could literally rewrite the rules of the Agriculture Department’s cotton allotments program for example—and that kind of influence would not come cheap. Johnson’s “hatchet man,” Clifton Carter, had introduced Estes to Johnson in the mid-1950s, and he, in turn, introduced his mistress, Madeleine Brown, to Estes at a Democratic social function in Austin. According to her account, “Billie Sol had promised Lyndon a $500,000 contribution, but had been slow in sending it. Lyndon called before dawn one morning, ‘Where the hell is that cash” he bellowed from our suite at the Driskill. ‘Lyndon, do you know what time it is?’ Billie Sol replied. ‘Hell, I didn’t call you to find out what time it is! I called you to find out where the hell that cash is. I want you to get out to the fucking airport and get that goddamn cash on its way now!’”12 (emphasis in original). As will be noted in a later chapter, during the course of their volatile relationship, Johnson had reportedly accepted $10 million altogether from Billie Sol Estes alone.

  All of the information concerning the collection and disbursement of millions of dollars of “campaign contributions” came not from any investigation into Lyndon Johnson’s illegal activities though; those hearings had come to an abrupt close shortly after he became president. The startling information coming to light in 1975 about Johnson started accidentally, as a result of a Securities and Exchange Commission lawsuit against the Gulf Oil Corporation; this came about not because the federal bureaucracy breathed any life into the earlier investigations into Lyndon Johnson, but two years after his death, as part of the investigation into his successor’s much-smaller-scale scandal named Watergate.13 In a historical irony, the wheels of justice—grinding ever so slowly—aiming to bring down Richard Nixon for arguably much smaller transgressions and abuses of power, accidentally uncovered some of the slightest of Lyndon Johnson’s criminal acts, and then over two years after his death. But the alleged “campaign donations” weren’t the only source of funds Johnson was tapping, as will be seen shortly.

  The TFX Scandal

  The largest military contract ever, in 1960, was still being negotiated as the Eisenhower administration wound down. The air force had initiated the plan for a successor to its F-105 tactical fighter, which became known as the TFX/F-111 project. The air force proposal was for a supersonic swing-wing fighter designated the TFX. The procurement program had been initiated during 1960, but the final design and bidding process had just begun. The assumption of the military officials involved with it was that the Boeing Company was clearly in first position to win the contract because of its superior design for the fighter jet fleet. The budget called for an expenditure of $7 billion, so other, less-experienced companies were interested in competing for the bid. The awarding of this contract became a gift for the new administration to dispense. The new vice president, Lyndon Johnson, immediately saw it as a choice plum that could be used as a “payoff” for his financial backers. Unfortunately for it, the Boeing Corporation was located in the wrong states—Washington and Kansas—and was not a significant contributor to Johnson’s money machine.14 It was Johnson himself, pressuring McNamara and Kennedy, who manipulated the award of this contract to General Dynamics Corporation of Fort Worth, Texas.15 As noted previously, the person having the greatest ownership stake in General Dynamics (20 percent) was Henry Crown, a major Democratic Party fund-raiser and financier in Chicago, who had numerous Mob connections, from Los Angeles and Las Vegas to New Orleans, Miami, and Dallas.16 Crown was also a close associate of Sidney Korshak, a lawyer who worked for the Chicago Mob and was described by senior Justice Department officials as one of “the most powerful members of the underworld.”17

  In January 1961, immediately upon assuming office as the secretary of defense, Robert McNamara changed the TFX from an air force program to a joint air force–navy project and announced a new round of studies, purportedly for the purpose of economizing the acquisitions and combining them into a single airframe. The companies that were bidding on it were to be given new technical specifications. On October 1, 1961, the two services sent the companies the requests for proposals (RFPs) on the TFX, with instructions to submit the bids by December 1, 1961. There were a total of six bids, three of which were submitted by individual companies: the Lockheed Aircraft Corporation, the North American Aviation Corporation, and the Boeing Company. The other three bids represented joint ventures: Republic Aviation and Chance Vought, General Dynamics Corporation and Grumman Aircraft, and McDonnell Aircraft and Douglas Aircraft. Of all these defense firms, the one benefiting most from the transfer of power from Eisenhower to Kennedy and Johnson was General Dynamics, whose main aircraft plant was located in Fort Worth, Texas. After Kennedy’s assassination, it gained even more, its stock rising from $23.75 on November 22 to $25.13 on November 26, and by February 1964 it was up over $30.18

  Before he ran for governor of Texas, John Connally had been named as the secretary of the navy by JFK, with Lyndon Johnson’s backing. When he left the position to return to Texas, he was replaced by another Texan, Fred Korth, the former president of the Continental National Bank of Fort Worth, Texas, again after strong lobbying by Lyndon Johnson. Fred Korth was a member of the exclusive Suite 8F Group discussed in chapter 3, and for many years was a director of Bell Aerospace Corporation of Fort Worth and a longtime friend of Lyndon B. Johnson. Before joining the administration, Korth used his political influence in Washington to promote General Dynamics contracts. As the former president of Continental National Bank, which had loaned General Dynamics millions of dollars, he knew in 1962 that in the two previous years, it had lost over $170 million and was close to bankruptcy if it did not get the TFX contract. The deputy secretary of defense in 1962 was Roswell Gilpatric, who was previously chief counsel for General Dynamics and strongly supported their bid for the contract.19

  An air force evaluation indicated that General Dynamics’s bid was almost $400 million more than the one from Boeing; moreover,
Defense Department memos suggested that Boeing’s design was “operationally superior.” “Three times the Pentagon’s Source Selection Board found that Boeing’s bid was better and cheaper than that of General Dynamics and three times the bids were sent back for fresh submissions by the two bidders and fresh reviews. On the fourth round, the military still held that Boeing was better but found at last that the General Dynamics bid was also acceptable”20 (emphasis added). Against these recommendations, McNamara threw his support to General Dynamics because “Boeing had from the very beginning consistently chosen more technically risky tradeoffs in an effort to achieve operational features which exceeded the required performance characteristics.” It cannot be said that McNamara was slow to learn how to speak in bureaucratic double-talk to rationalize otherwise unconvincing arguments during his years in Washington DC.

  On October 24, 1962, Seth Kantor reported in the Fort Worth Press that “General Dynamics of Fort Worth will get the multibillion-dollar defense contract to build the supersonic TFX Air Force and Navy fighter plane, the Fort Worth Press learned today from top Government sources.” Korth later told the McClellan committee that investigated the granting of the TFX contract to General Dynamics “that because of his peculiar position he had deliberately refrained from taking a directing hand in this decision (within the Navy) until the last possible moment.”21

  A few weeks before the assassination, General Dynamics was the subject of still another congressional investigation, to look into charges of “influence peddling” regarding the Pentagon’s controversial award of the TFX fighter-bomber, later known as the F-111. Before the investigation was stopped, immediately after Kennedy’s assassination, it had turned up the fact that one of the key participants in the selection of General Dynamics was Deputy Defense Secretary Roswell Gilpatric, another Texan and friend of Lyndon Johnson, who was General Dynamics’s special counsel before joining the administration in 1961. It also discovered that Fred Korth’s old employer, the Continental National Bank of Fort Worth, was the principal money source for the General Dynamics plant. Shortly after this was discovered, Korth was forced to resign on November 1, 1963. But nothing was done to reverse the flawed decision, and on December 12, 1963, the new president, Lyndon Johnson, visited Forth Worth to attend the celebration at the General Dynamics plant. Congressman James Wright, the Texas Democrat who later had to resign his position as Speaker of the House because of his own conflicts of interest, introduced Johnson as the “greatest Texan of them all.” He explained that Johnson was responsible for obtaining the TFX contract.

  During Senator McClellan’s Permanent Investigations Committee hearings into the contract, Senator Sam Ervin asked Robert McNamara “whether or not there was any connection whatever between your selection of General Dynamics, and the fact that the Vice President of the United States happens to be a resident of the state in which that company has one of its principal, if not its principal office.” McNamara tearfully responded, “Last night when I got home at midnight, after preparing for today’s hearing, my wife told me that my own 12-year-old son had asked how long it would take for his father to prove his honesty.”22

  McClellan’s Senate committee never issued a report on the TFX scandal. In fact, it stopped meeting after the assassination of JFK and after the new president Lyndon Johnson began pressuring Senator McClellan to quietly bring the matter to a close before anything was concluded that might prove to be too embarrassing.23 At that point, even honorable men serving in Congress agreed implicitly with that decision, in the face of the certain constitutional crisis that would have resulted in the impeachment of the new president for any criminal action. Also, the probability that such a report would have condemned Kennedy—as well as Johnson, Korth, Gilpatric, and McNamara—would further explain why the entire matter was permanently shelved. Having McNamara’s imprint on the TFX matter may explain Johnson’s power over him. A common tactic LBJ used to increase his leverage over others was to have them become implicated in his corrupt activities, making them even more beholden to him.

  On June 26, 1963, Clark R. Mollenhoff interviewed Robert McNamara about his role in awarding the TFX contract to General Dynamics. McNamara claimed that Johnson had applied no political pressure on him concerning the contract. He admitted that he knew all about Fred Korth’s business relationship with General Dynamics and Bell Aerospace. He also revealed he was aware of Roswell Gilpatric’s role “as a lawyer for General Dynamics just prior to coming into government, the role of Gilpatric’s law firm in continuing to represent General Dynamics, and the amount of money Gilpatric had received from the law firm since becoming Deputy Defense Secretary.” McNamara maintained that he was convinced that this did not influence the decision made by Korth and Gilpatric.24

  Johnson’s role in these events was confirmed when Don B. Reynolds testified on November 22, 1963, in a secret session of the Senate Rules Committee. Reynolds told the committee of seeing a suitcase full of money that Bobby Baker had described as a “$100,000 payoff to Johnson for his role in securing the Fort Worth TFX contract.”25 The thread of this plot becomes woven into other similar Johnson-Baker scams below and will reappear shortly. As the U.S. Congress pondered the crescendo of scandals in the fall of 1963, after John F. Kennedy’s assassination, the various investigations into Lyndon Johnson’s conduct would be closed down, one at a time, until a few months later, they had all been scrapped forever even though none of them had ever been satisfactorily resolved. Lyndon Johnson had benefited once again from the same “benefit of the doubt” that had always been given to him.

  Billie Sol Estes and his Friends

  Billie Sol Estes had moved to the small town of Pecos, Texas, in 1946 and set up a small business selling irrigation pumps that used cheap natural gas instead of the more expensive electricity formerly used. He also sold anhydrous ammonia as a fertilizer; both of these business lines were profitable, and he soon became a wealthy businessman. Over the next few years he developed other sideline businesses that involved less tangible property but higher risks and even higher profits. One involved his specious claims about growing and storing cotton, which never really existed, and then using the invisible cotton and the (largely) nonexistent fertilizer storage tanks as collateral for bank loans. The story of the crash of the Estes empire was a long time in coming, but when it did, it was an explosive journalistic moment. In a lengthy cover-page article on May 25, 1962, Time magazine described Estes as “a bundle of contradictions and paradoxes who makes Dr. Jekyll seem almost wholesome.”

  Estes held himself out as a person of high morals and was very active in his church as a lay preacher, assisting the regular pastor as needed, often delivering sermons on Sunday mornings. As evidence of his morality, he liked to tell people that he never smoked, drank, gambled, or swore, and he considered dancing immoral. But while Billie could qualify as a paragon of virtue on Sundays in church, on the other days of the week, his modus operandi was that of a cutthroat, ruthless businessman who did not hesitate to use his skills of fraud and deceit on a massive scale to ruin competitors and amass a personal fortune.26 The multiple frauds that the sanctimonious Estes had been committing for over fifteen years, all while trying to portray himself as beyond reproach, were beginning to be exposed by the end of 1960. As the new Kennedy-Johnson administration was taking form in Washington in January 1961, Estes had been put under increasing pressure by USDA officials and their Texas inspector, Henry Marshall, who had questioned some of the allotments that Estes had applied to certain untillable and/or submerged lands and other government-expropriated acreages. In the short-term context at least, no other single person gained more from the election of the Kennedy-Johnson team than Billie Sol Estes, who had established solid connections to the “second man” on that team. The 1962 cover article in Time contained this vivid description of Billie Sol:27

  The Amarillo Daily News called him “probably the biggest wheeler and dealer in all of West Texas.” He conveyed an impression that he wie
lded a lot of political influence beyond the boundaries of Pecos and even beyond Texas. He liked to flash a card indicating that he had donated $100,000 to the Democratic Party during the 1960 campaign. He displayed on the walls of his office photos, some fondly signed, of President Kennedy, Vice President Johnson, Harry Truman, Adlai Stevenson, John McClellan and other Democratic political notables. He boasted of his friendships with politicians, including Texas’ Democratic Senator Ralph Yarborough.

  But for all his aura of wealth and power, Billie Sol remained a somewhat ridiculous figure; the inner bumpkin kept showing through. One acquaintance recalls him as “the kind of man whose lapels always seem a little too wide.” He sported a diamond stickpin that seemed garish even in Texas. He was constantly bumbling into grotesque situations. Invited to Governor Clement’s second inaugural in 1955, he was the only guest to show up in the ornate regalia of a Tennessee colonel. In 1956, he made a fool of himself by trying to persuade the president of a Pecos bank to help finance a wacky scheme to help Adlai Stevenson win the election. Under the Estes plan, large schools of parakeets, trained to say “I like Adlai” in unison, would fly over U.S. cities. When the banker tried to tell Estes that parakeets could not be trained to say “I like Adlai,” much less say it in unison, Estes got purple-angry, accused the banker of being anti-Stevenson, and stomped out.

  Billie Sol Estes, having started out the son of a dirt-poor farmer whose mother sold hand-churned butter to help pay the mortgage, had the singular ambition from his earliest years of becoming as rich as the Murchison family of Dallas, the most famous of the Texas oil millionaires.28 He had his own theories about how he would accomplish that goal, one of which was to ingratiate himself with key or influential people, putting them in his debt by one means or another. His favorite means was by handing out presents—a car, fancy shoes, or clothes, even cash—for which the recipient would implicitly understand that he was now obliged to return the favor at some point. Estes preferred to control that point, to ensure a profit on his investment was realized, and maximized. He practiced this theory especially on politicians, and from his earliest days of business, his biggest “score” was Senator Lyndon B. Johnson,29 who perhaps had met his match when it came to the political games of “pay for play” and the timeless quid pro quo, referred to in Texas colloquialism as “You scratch my back and I’ll scratch yours.” One of Estes’s novel ideas was that the value of the creditor’s interest in the debtor was determined by the size of the debt, the more the debt, the greater the creditor’s interest in the solvency of the debtor; when a debt got big enough, the creditor acquired an interest in the very survival of the debtor. He liked to say, “If you get into anybody far enough, you’ve got yourself a partner.” In Estes’s case, he certainly got far enough into Commercial Solvents, a New York chemical manufacturer, which did become a sort of partner. It was this partnership that enabled Estes to get into big-time wheeling and dealing that became his trademark.30